ACCT 229 CORE EXAM 2026 SET QUESTIONS AND
ANSWERS RATED A+
✔✔purpose of an audit - ✔✔attest to the FAIRNESS of financial statement "in
accordance with GAAP"
unqualified - all okay
qualified - all okay except for...
✔✔Sarbanes-Oxley Act - ✔✔A law passed by Congress that requires the CEO and
CFO to certify that their firm's financial statements are accurate.
✔✔qualitative characteristics - ✔✔conceptual framework of accounting
✔✔understandability - ✔✔info should be comprehensible
✔✔relevance - ✔✔useful to informed decision maker; can make difference in decision
making
✔✔faithful representation - ✔✔complete, neutral, free from error
✔✔comparability - ✔✔comparable between companies by following GAAP rules;
disclosure of methods used
✔✔consistency - ✔✔consistent between acct periods within same company
✔✔verifiability - ✔✔independent parties can agree on measurement
✔✔timeliness - ✔✔presented in timely manner while still relevant
✔✔Assumptions & Principles - ✔✔help decision maker understand what accounting
information reports as well as inherent limitations
✔✔economic entity - ✔✔business transactions separate from owner's
✔✔going-concern - ✔✔the company will continue to operate in the foreseeable future
✔✔monetary unit - ✔✔all info will be measured in its monetary currency
✔✔time period assumption - ✔✔life of a company can be reported over a series of
shorter periods
✔✔cost principle - ✔✔assets are recorded at original cost
, ✔✔materiality - ✔✔size of transaction makes difference in how its recorded
✔✔conservatism principle - ✔✔never overstate assets or revenue; never understate
liabilities or expenses
✔✔revenue recognition principle - ✔✔record revenues when earning process is
complete
✔✔expense recognition principle (matching concept) - ✔✔match expenses incurred
with revenues earned in the same accounting period -- expense helped generate the
revenue!
✔✔trial balance - ✔✔a list of all accounts in the ledger & their ending balance (whether
debit or credit)
✔✔cash basis - ✔✔revenues are recorded when cash is RECEIVED; expenses are
recorded when cash is PAID
✔✔accrual basis (required by GAAP, what we do in class) - ✔✔revenues are recorded
when EARNED without regard to cash received; expenses are recorded when
INCURRED or ACCRUED
✔✔deferrals - ✔✔C before D
cash received/paid BEFORE rev/exp is recognized
✔✔deferred revenues - ✔✔"Unearned Revenues" - cash received from customer
BEFORE earned
✔✔deferred expense - ✔✔"prepaid expense" - cash is paid by company BEFORE
expense has been incurred
✔✔accruals - ✔✔A before C
cash is received/paid AFTER rev/exp is recognized
✔✔accrued revenues - ✔✔create "receivables" -- wont receive earned cash until next
period
✔✔accrued expenses - ✔✔"accrued expenses payable" - company has used up
wages/rent/interest but wont pay in cash until NEXT period
✔✔Purpose of Income Statement (Multi-step) - ✔✔shows results of the company's
operations (flows of revenue and expenses) for a period of time
ANSWERS RATED A+
✔✔purpose of an audit - ✔✔attest to the FAIRNESS of financial statement "in
accordance with GAAP"
unqualified - all okay
qualified - all okay except for...
✔✔Sarbanes-Oxley Act - ✔✔A law passed by Congress that requires the CEO and
CFO to certify that their firm's financial statements are accurate.
✔✔qualitative characteristics - ✔✔conceptual framework of accounting
✔✔understandability - ✔✔info should be comprehensible
✔✔relevance - ✔✔useful to informed decision maker; can make difference in decision
making
✔✔faithful representation - ✔✔complete, neutral, free from error
✔✔comparability - ✔✔comparable between companies by following GAAP rules;
disclosure of methods used
✔✔consistency - ✔✔consistent between acct periods within same company
✔✔verifiability - ✔✔independent parties can agree on measurement
✔✔timeliness - ✔✔presented in timely manner while still relevant
✔✔Assumptions & Principles - ✔✔help decision maker understand what accounting
information reports as well as inherent limitations
✔✔economic entity - ✔✔business transactions separate from owner's
✔✔going-concern - ✔✔the company will continue to operate in the foreseeable future
✔✔monetary unit - ✔✔all info will be measured in its monetary currency
✔✔time period assumption - ✔✔life of a company can be reported over a series of
shorter periods
✔✔cost principle - ✔✔assets are recorded at original cost
, ✔✔materiality - ✔✔size of transaction makes difference in how its recorded
✔✔conservatism principle - ✔✔never overstate assets or revenue; never understate
liabilities or expenses
✔✔revenue recognition principle - ✔✔record revenues when earning process is
complete
✔✔expense recognition principle (matching concept) - ✔✔match expenses incurred
with revenues earned in the same accounting period -- expense helped generate the
revenue!
✔✔trial balance - ✔✔a list of all accounts in the ledger & their ending balance (whether
debit or credit)
✔✔cash basis - ✔✔revenues are recorded when cash is RECEIVED; expenses are
recorded when cash is PAID
✔✔accrual basis (required by GAAP, what we do in class) - ✔✔revenues are recorded
when EARNED without regard to cash received; expenses are recorded when
INCURRED or ACCRUED
✔✔deferrals - ✔✔C before D
cash received/paid BEFORE rev/exp is recognized
✔✔deferred revenues - ✔✔"Unearned Revenues" - cash received from customer
BEFORE earned
✔✔deferred expense - ✔✔"prepaid expense" - cash is paid by company BEFORE
expense has been incurred
✔✔accruals - ✔✔A before C
cash is received/paid AFTER rev/exp is recognized
✔✔accrued revenues - ✔✔create "receivables" -- wont receive earned cash until next
period
✔✔accrued expenses - ✔✔"accrued expenses payable" - company has used up
wages/rent/interest but wont pay in cash until NEXT period
✔✔Purpose of Income Statement (Multi-step) - ✔✔shows results of the company's
operations (flows of revenue and expenses) for a period of time
